The Ministry of Foreign Affairs has responded to a reported Japanese deal on the disputed Diaoyu Islands by reasserting China's sovereignty over them.

Foreign ministry spokesman Kong Quan on Friday called on Japan to "properly handle'' the issue of the Diaoyu Islands by following the Sino-Japanese Joint Statement and the one-China principle.

Taiwanese media reported recently Taiwan and Japan had reached a consensus to designate the area between the 27th and the 29th parallel north as a region where both can fish.

However, the Japanese foreign ministry on Wednesday denied the report.

For quite some time, Taiwan people who fish in the waters of the Diaoyu Islands have been driven out by Japanese maritime police.

"The Chinese Government has all along attached importance to safeguarding the interests of the Taiwan compatriots, including the interests of fishermen,'' said Kong.

The Diaoyu Islands are a disputed region between China and Japan in the East China Sea. China insists the islands are its territory.

Spokesman Kong reaffirmed in June that China has indisputable sovereignty over the Diaoyu Islands and its adjacent islands and that any attempts to seize the Chinese territory will not succeed.

Kong also commented on a Pentagon annual report released on Wednesday on China's military power, which said the country is rapidly boosting its ballistic missile stocks to prepare for a possible future conflict across the Taiwan Straits.

"There is nothing wrong with the build-up of defense and military deployments by China, a sovereign state, to safeguard national security and territorial integrity,'' said Kong, stressing that China's national security policy is defensive.

Reaffirming the Chinese Government's policy of "peaceful reunification'' and "one country, two systems,'' Kong said the growth of the independence movement in Taiwan is the greatest menace to the stability of the Taiwan Straits.

Some people in the United States exaggerate the mainland's military power and its threat to Taiwan to provide an excuse for selling weapons to Taiwan, said Kong.

He said China hoped the United States will honor its commitments to adhere to the three Sino-US joint communiqués and the one-China policy, and oppose Taiwan's independence.

When asked to confirm whether the South Pacific country Nauru had closed its unofficial embassy in Beijing to establish diplomatic ties with Taiwan, Kong said bilateral ties have developed well since the two established diplomatic relations one year ago.

The government of Nauru has on many occasions noted it will appoint an ambassador to China and officially open an embassy, said Kong, vowing that China will help build the embassy in accordance with the Communiqué on the Establishment of Diplomatic Relations and the Vienna Convention on Diplomatic Relations.